Those who are trading Bitcoins — and, more importantly, owning
Bitcoins — are making money hand over fist.

And here's what the latter folks understand that the those who
are huffing about "Bitcoin bubbles" don't:

The most you can lose if Bitcoins go to zero is 100% of your
money.

The most you can make, meanwhile ...

Well, no one knows exactly how much you can make.

But it's probably a lot more than 100%.

Those who bought Bitcoins in early March, for example, have now
made 7X their money — a return of nearly 600%.

That's a pretty nice return.

And it's a return that more than justifies the risk that these
speculators took when they bought their Bitcoins for $35 — namely
that the price of Bitcoins could go to zero.

All the speculators would have lost if Bitcoins went to zero was
the value of their bet.

And now here they are, six weeks later, sitting on profits of 7X
their bets.

In other words, for anyone who realized that it was possible that
Bitcoins might trade at $235 in relatively short order, it was a
no-brainer to buy them for $35.

Bubble or no, a wise speculator would take that bet every day.

And how about now?

Are Bitcoins a good bet at $235?

Well, let's run through the possible outcomes.

Bitcoins could certainly plunge suddenly from $235 to zero.

If they did that, you would lose 100% of your bet.

But ...

Bitcoins could also easily go to $2,350 — or higher.

(Bitcoins are impossible to value, but there are, and
theoretically always will be, a finite number of them. Meanwhile,
as Bitcoin prices rise, more and more people want them. And there
are
sound conceptual reasons why an electronic currency like Bitcoin
is a good idea — one whose time has come. So it is possible
that the "equilibrium" for Bitcoin prices, to the extent that
there will ever be an equilibrium, is vastly higher than where
Bitcoins are trading today. If you don't believe this, please
read this article, which discusses it in more detail.)

If Bitcoins go to $2,350, then that would be a 10X return.

So that's one possible betting scenario:

If you lose your bet, you lose 100%.

If you win your bet, you make 1000%.

That's a good bet.

Now, you may think there is no conceivable way that Bitcoin
prices could ever hit $2,350.

And you might
be right.

But ask yourself this question:

When Bitcoins were trading for $35 six weeks ago, did you think
there was a chance that they would ever hit $235?

If you're like most people, you didn't.

If you're like most people, you either had no idea what Bitcoins
even were ... or you cackled smugly about how Bitcoin was
obviously a bubble and that all of the idiots stupid enough to
buy Bitcoin would lose their shirts.

Well, just so you know, many of those "idiots" were laughing at
you, too.

One of them reached out to me the other day.

He explained why he bought a boatload of Bitcoins when they were
trading for much less than $35 apiece:

... over the long term the only two possible outcomes are
1000X+ or 0 — I don't know the probability of each possible
outcome, but I firmly believe those are the only two possible
options ... I actually don't think $400 is a meaningful
equilibrium point for it.

This is the equation that many of the "idiots" hoarding Bitcoins
are thinking about when they decide to buy more Bitcoins and keep
hoarding them:

All they can lose is all of their money.

All they can make, meanwhile?

Unlimited.

(Yes, this is classic bubble logic. Yes, someday, many Bitcoin
speculators will probably lose their shirts. And, no, there's no
way to determine what Bitcoins are "actually worth." That's why I
call Bitcoin the "perfect
bubble." But what many folks who snicker smugly about
"bubbles" don't seem to understand is that before some
Bitcoin speculators lose their shirts, some other
Bitcoin speculators are going to, well, coin it.)

WARNING: Bitcoins have no inherent value, and they
could go to zero at any time. If you decide you just can't stand
missing out on all the Bitcoin riches and plunge in, and they
instantly go to zero, don't come crying to me.